Milling & Baking News - March 19, 2013 - 36

Signature Interview 

Continued from Page 33

of concessions, an atmosphere of mistrust already had been created, Mr.
Durkee said.
He recalled, “President Hurt (Frank
Hurt, who Mr. Durkee succeeded in

January 2013) had caught wind that
something was wrong financially, so he
called Ripplewood(major investors in
Hostess Brands) in early 2011 and said,
‘Listen, I’m hearing some bad things.
That’s the word on the street. Are you

Hostess Brands 2012 recap

he following is a chronology of some of the key events in the demise of Hostess
Brands Inc. referenced in the interview of David B. Durkee, president of the Bakery,
Confectionery, Tobacco and Grain Millers International Union.

Jan. 11: Hostess Brands, Inc. files for reorganization under Chapter 11 bankruptcy
protection. The company said its current cost structure is not competitive due to a legacy
pension and medical benefit obligations and restrictive work rules.
Feb. 28: Hostess Brands, Inc. retains Gregory F. Rayburn of Kobi Partners L.L.C. as
its chief restructuring officer (c.r.o.), subject to bankruptcy court approval. Mr. Rayburn is
to report to Brian Driscoll, president and chief executive officer. Less than two weeks later,
Mr. Driscoll resigns.
March 2: A hearing on a motion from Hostess Brands, Inc. to reject 296 collective
bargaining agreements with its union employees has been rescheduled to March 23 and 26.
April 17: Ahead of a bankruptcy court hearing, the Teamsters Union, which represents more than 7,500 delivery drivers and merchandisers at Hostess, submits a proposal
the union said would share the burden among all stakeholders and put Hostess on a path
to financial recovery.
May 9: Hostess Brands issues federal Worker Adjustment and Retraining Notification Act (WARN) notices alerting its 18,000 U.S. employees it may have to shut down and
liquidate its business in as soon as 60 days.
June 25: Hostess Brands Inc. is told by U.S. Bankruptcy Judge Robert Drain of the
U.S. Bankruptcy Court Southern District of New York that it may not impose a new collective bargaining agreement on the B.C.T.G.M.
Sept. 14: The International Brotherhood of Teamsters narrowly approves Hostess
management’s “best and last offer.”
Sept. 17: Members of the B.C.T.G.M. reject the Hostess proposal with 92% voting
against.

Sept. 20: Hostess files a motion in the U.S. Bankruptcy Court Southern District of
New York to impose a new collective bargaining agreement on the B.C.T.G.M.
Oct. 4: Judge Robert Drain approves the Hostess petition to impose the agreement
on the bakery union.
Nov. 1: Strikes are authorized by the B.C.T.G.M.
Nov. 9: Members of the B.C.T.G.M. go on strike.
Nov. 12: Approximately 23 of the 36 Hostess plants are on strike.
Nov. 16: Hostess suspends all operations and files a motion with the court to close
its business and sell its assets.
Nov. 20: A mediation between Hostess management and the B.C.T.G.M. is unsuccessful. MBN

36 / March 19, 2013 Milling & Baking News

guys okay?’ And the response was, ‘Yes,
everything’s fine.’ And it then was either
June or July, they (Hostess executives)
asked to come over here. They came in
and said they had significant financial
problems within the company. And I
remember Frank saying, ‘I called Ripplewood and they said that wasn’t true. It’s
very discouraging. You didn’t do what
you said you were going to do from 2004
to 2009, and now you’re back again.’”
In the weeks and months that followed, Mr. Hurt, together with the
B.C.T.G.M.’ s general counsel and a financial expert hired by the union agreed
to negotiate with Hostess management.
“They worked for six solid months
from July through December of 2011
to try to bring a deal back to Frank that
was acceptable,” he said. “And none of
them was acceptable, because none of
them dealt with the problem, and that
was to devise a business plan that was
sustainable with low debt. That’s what
Frank Hurt told them, over and over
again. ‘Don’t come back with high debt
that you have to service and don’t come
back until you have a sustainable plan.’”
In terms of union demands, Mr. Durkee said the B.C.T.G.M. proposed three.
First the company sought “successorship” so that a new labor agreement
would survive if the company were sold.
“Next, we absolutely put in writing that we wanted low debt,” he
said. “And third, that if the company
returned to profitability, the workers
would get something of economic substance, begin to recover from the concessions they had been making, and
that’s what it said. It wouldn’t say we
wanted 50 cents. It didn’t say anything
like that. And Hostess never agreed to
any of those three things. They said no
on all three. And they never came back
with a sustainable, business plan. And
they never came back to us with something that didn’t have a lot of debt.”
Interactions did not improve in January 2012 when Hostess filed for bankruptcy protection for a second time, Mr.
Durkee said. With the filing in January
2012 came a plan to aborgate all contracts
of the Hostess unions, Mr. Durkee said.
“And that’s not a good situation,”
he said. “That’s a completely different
situation than we had in 2004. Very
adversarial in my mind. We certainly
weren’t working together shoulder to
shoulder like we were in 2004.”
Contrary to accusations that the
union refused to negotiate in the weeks
and months following the bankruptcy
filing, Mr. Durkee said negotiations
were vigorous, albeit unsuccessful.
“There were some claims we didn’t
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